Idaho Labor Market. Idaho’s unemployment rate is holding steady at about 3.8 percent.
Idaho’s nonfarm payrolls remained fairly stable. The strongest gains occurred in construction, financial activities, other services, and information. The state’s seasonally adjusted nonfarm employment has grown 3.3 percent since last year. Compared to a year ago, Idaho has added 22,000 jobs to the economy, with the current employment level registering at 781,400. The United States’ unemployment rate held steady at 4.9 percent.
With strong job growth, sustained demand for workers, and a growing number of Idahoans looking for work, Idaho is the number one state in the nation for year-over-year job growth—and it has been for six additional months this year. The Idaho Department of Labor recently published projections for Idaho’s labor market: employment is expected to grow in all categories except mining, in which only minor losses are expected. Broad employment growth suggests economic health that is both sustainable and shared by a wide variety of Idaho careers.
U.S. Short-Term Outlook. Registering an uptick from the previous estimate, the third and final estimate of second-quarter U.S. GDP growth increased from an annualized 1.1-percent to 1.4-percent growth rate. The major difference between the second and third estimates was an increase in nonresidential fixed investment, or spending on plants and equipment; in the second estimate, nonresidential fixed investment had decreased. Other increases in the second quarter included personal consumption expenditures and exports. Based on preliminary data, some economists estimate that third-quarter growth could reach 3 percent, which would be a much-needed increase from 1.1-percent growth during the first half of the year.
Notwithstanding the more positive numbers, in the week that followed the release of the GDP growth estimate, the International Monetary Fund downgraded its forecast for U.S. economic growth from 2.2 percent to 1.6 percent. The forecast for the global economy remained unchanged at 3.1 percent. Although developed economies have grown more slowly than historic rates (the U.S. economy included), developing and emerging nations have grown more quickly than expected.
Despite talk all year that the Fed would gradually increase interest rates, the Federal Open Market Committee did not vote to raise interest rates in September. However, several policy makers dissented from the overall decision, favoring a quarter-percent interest rate hike. Pressure to raise rates has grown throughout the year as labor market and housing market numbers have registered increases, indicating that the economy is getting stronger. Economists have been hesitant to raise rates, however, because other economic indicators have not exhibited strong growth. It remains possible that the Fed will raise rates either in November or December, making good on their December 2015 statement that rates would climb in 2016.
After two and a half years of an oil glut, OPEC finally agreed to scale back oil production during an informal meeting in September. Details will be determined at their formal meeting in November. The extent of the effect of OPEC’s oil production cut back is uncertain at this point because there are more oil-producing countries contributing to the market now than there were the last time OPEC cut production, lessening its impact on overall oil prices. After the decision was announced, however, oil prices rose. It is possible that the cut in production will raise prices sufficiently to encourage more investment in oil in the United States, thus boosting the engineering and manufacturing industries.
U.S. Long-Term Outlook. The current unpopularity of trade deals, both in the United States and globally, has the potential to affect the long-term U.S. economic outlook by preventing future trade deals and agreements designed to increase Americans’ access to goods from around the world. Although caution is always wise, trade liberalization leads to a benefit averaging 43 cents per person per month in America—it may not sound like much initially, but this number adds up quickly.
In late September, the World Trade Organization (WTO) forecast for the first time in fifteen years that global trade growth would not keep pace this year with global GDP. There are many trade partnerships in place throughout the world, but recent agreements are facing some hurdles. In particular, the Trans-Pacific Partnership (TPP), signed in February, has seen recent opposition.
In a world where consumers will pay for authentic Colombian coffee and Swiss Gruyere cheese, trade partnerships have made foreign items more accessible. Trade partnerships prevent national governments from imposing high tariffs that increase the prices of foreign goods. The arguments against free trade claim that free trade hurts American companies, particularly manufacturing. Opponents of free trade feel that because items manufactured outside the United States can often be produced more cheaply, trade gives companies greater incentive to outsource or move operations off shore.